Execs of bankrupt Chinese conglomerate arrested in crackdown



Chinese police have arrested the top two executives and co-founders of HNA Group, a bankrupt conglomerate that crumbled earlier this year after racking up nearly $90 billion in debt, the company announced Friday.

The arrests come amid a broader crackdown by Chinese authorities targeting debt-laden companies that have helped fuel the expansion of China’s economy over the past decade by spending wildly with borrowed money.

Chen Feng, HNA’s chairman, and Tan Xiangdong, the company’s CEO, were arrested and taken into custody Friday over suspected crimes in Hainan Province, where HNA is headquartered.

The company did not specify the charges against Chen and Tan.

The arrests are the latest twist in the years-long saga at HNA, whose other co-founder and former chairman Wang Jian fell to his death in Southern France in 2018. Local police ruled the incident an accident.

The company, which started its business with Hainan Airlines, expanded aggressively in the 2010s, buying up major stakes in global companies like the Hilton hotel chain, Dutch transport group TIP Trailer Services and Deutsche Bank.

Chen Feng
HNA chairman Chen Feng was also busted in the large crackdown.

But the expansion was fueled almost entirely by huge amounts of debt secured against its core assets in China, drawing scrutiny from Beijing.

In January, Chinese creditors of the company launched bankruptcy proceedings and within days, HNA subsidiaries said billions of dollars in funds had been misused.

Last week, HNA announced that it would be reorganized into four independently operated sections and that all equity held by its old shareholders would be wiped out.

The specific charges against Chen Feng and Tan Xiangdong were not announced by HNA.
The specific charges against Chen Feng and Tan Xiangdong were not announced by HNA.
Andy Wong, File/AP

On top of the arrest of the two HNA executives, Yuan Renguo, the former chairman of Kweichow Moutai Group, a huge producer of liquor in China, was sentenced to life in prison for accepting more than $17 million in bribes, the state-run Xinhua news agency reported earlier Friday.

The arrests come as Chinese authorities try to deal with their homebound debt-reliant companies like property developer Evergrande Group without sending a panic throughout the country’s credit markets.

It remains unclear if Beijing will bail Evergrande out or let it default on its more than $300 billion in debt it accumulated during an aggressive expansion similar to that of HNA.

Tan Xiangdong
Tan Xiangdong had allegedly committed crimes in the Hainan Province of China.
Niu bo – Imaginechina

Evergrande said Thursday it managed to resolve interest payments that were due to domestic bondholders, but has yet to comment on payments due to international creditors, who say they have not received payment.

The company has 30 days to resolve the overdue payments before creditors can initiate proceedings.


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